MW506AE is the application the Comptroller of Maryland uses to decide whether a nonresident seller of Maryland real property, or of associated personal property, is fully or partly exempt from withholding on the sale proceeds. Individuals, fiduciaries, corporations, LLCs and partnerships that are nonresident transferors use it, one form per seller in most cases. On this page you can fill out the form online on FillingPDF and download or print the completed PDF; the Comptroller publishes the form and its instructions at the official source link.
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What is MW506AE?
Application for Certificate of Full or Partial Exemption (2024), Form MW506AE, is the Comptroller of Maryland form that nonresident individuals and entities use to request a certificate exempting all or part of the proceeds of a Maryland real property sale from withholding.
The form covers the sale of real property and associated personal property in Maryland. Page 1 holds a worksheet, "Calculation of Tentative Exemption," that runs from purchase price or inherited value (line 1) through adjusted basis (line 6) and the amount subject to tax (lines 8a and 8b) to the tentative withholding amount (line 10). The Comptroller recalculates that amount from the documents actually received and the amounts substantiated. If line 10 is zero, you may qualify for a full exemption, subject to verification.
Page 2 lists "Special Situations" that can support an exemption, such as a principal residence, a §1031 tax-free exchange, an installment sale under §453, inherited property transferred within 6 months of the date of death, an IRA custodian seller, or a seller receiving zero proceeds. An addendum covers transfers under other Internal Revenue Code sections, each with its own required documents.
A nonresident entity, for this form, is an entity that is not formed under Maryland law and is not qualified by or registered with the Department of Assessments and Taxation to do business in Maryland. The Comptroller's decision to issue or deny a certificate, and the amount of tax, is final and not subject to appeal.
Who needs to file MW506AE?
A transferor/seller that is a nonresident individual or nonresident entity and is selling real property, or associated personal property, in Maryland files Form MW506AE to seek a full or partial exemption from withholding. The instructions name the filers: an individual, fiduciary, C corporation, S corporation, limited liability company or partnership.
- Each transferor/seller files a separate form, unless the sellers are spouses filing a joint Maryland income tax return.
- Sellers who sell through a relocation company must also complete the MW506AE – Relo Addendum and attach it.
- Sellers who checked the rental/commercial box must already have filed the nonresident income tax returns reporting that income or loss; otherwise the application will be denied.
- Someone signing under a power of attorney must complete Maryland Form 548 and attach it.
The form must be signed by an individual (both spouses if they file a joint Maryland return) or by a responsible corporate officer. A tax preparer other than the taxpayer signs in the preparer block and enters a PTIN, which the form says is required by law.
When to file MW506AE
The completed Form MW506AE and all required documentation must be received by the Comptroller of Maryland no later than 21 days before the closing date of the sale or transfer. That is the condition the instructions give for timely receipt of a certificate.
The date of closing is required: an application with no closing date will not be processed. If a preliminary settlement statement is not available when you file, forward it as soon as it is completed so the settlement costs can be credited. If you do not yet know the settlement agent, email the agent's name and address to [email protected] as soon as possible so the sale is not delayed in recording. The form sets no other deadline.
Documents you need
- Line 1: an original settlement statement, property tax printout, original contract, date of death appraisal, or other proof of the original purchase price or inherited value.
- Line 2, only if you claim capital improvements: paid invoices or receipts with cancelled checks, showing proof of payment, the property address and the work completed.
- Line 3: a settlement statement for the settlement costs claimed; for a pending sale, a preliminary closing disclosure.
- Line 5, if the property was rental or commercial: a depreciation schedule or the returns showing the depreciation taken.
- Line 7: the current contract (page 1 and signature pages only) or a preliminary settlement statement.
- Principal residence of active-duty military or certain government employees: transfer orders and proof of residency, such as a federal return with a Maryland address, utility bills or property tax statements.
- §1031 exchange: a letter signed by the qualified intermediary naming the transferor(s), the property, the exchange, and whether there is boot and its amount; proof of payment if withholding was paid out-of-pocket.
- Zero proceeds: a copy of the seller's letter to the title company and the title company's acknowledgment letter that all proceeds go to another seller or co-owner.
- Installment sale under §453: the contract of sale or settlement sheet, and a copy of the promissory note the transferee will execute at settlement.
- Inherited property transferred within 6 months of death: a copy of the death certificate and the estimated settlement sheet from the title company.
- IRA custodian seller: the preliminary settlement sheet, the custodian's Certificate of Good Standing, and a title company letter stating all proceeds go to the custodian.
- Transfers under the addendum (§§ 351, 361, 501(a), 721, 731, 857, 1033, 1041, 1368): the documents listed for the matching code letter a through i.
- MW506AE – Relo Addendum, when selling through a relocation company.
- Maryland Form 548, if a power of attorney is necessary.
How to fill out MW506AE
Enter seller identification
On page 1, enter the transferor/seller's name, address and Social Security number or federal employer identification number. If the IRS issued an individual taxpayer identification number (ITIN), enter the ITIN. Add the spouse's details if applicable.
Select entity type and ownership
Check Individual/Estate/Trust or Business, and enter the ownership percentage. For example, four equal owners means 25% for a single application.
Describe the property
Enter the description, including street address and county as listed with the State Department of Assessments and Taxation (SDAT). With no street address, give the full SDAT property account ID numbers.
Answer the rental question and closing date
Check Yes or No for rental or commercial use and give the dates in mm/dd/yyyy if Yes. Enter the Date of Closing, which is required.
Complete lines 1 through 3
Line 1: purchase price or inherited value. Line 2 (optional): capital improvements. Line 3: settlement expenses, adding 3a (original purchase) and 3b (pending sale), each with its attachment.
Figure adjusted basis on lines 4–6
Line 4: add lines 1 through 3. Line 5: depreciation already taken on rental or commercial property. Line 6: subtract line 5 from line 4.
Enter sales price and taxable amount
Line 7: contract sales price. Line 8a: subtract line 6 from line 7. Line 8b: multiply line 8a by the ownership percentage (1.00, .50, .333, etc.).
Select tax rate and tentative withholding
On line 9, check Individual or Business. On line 10, multiply line 8b by the applicable rate; enter zero if the result is zero or less.
Check any Special Situation
On page 2, enter the seller's name and number, then check the box that applies, if any. If none apply, the exemption rests only on the page 1 worksheet.
Enter the settlement agent's details
Give the contact person, company, street address, city, state, ZIP code, telephone, fax and email of the settlement agent to whom the certificate is mailed if issued.
Sign and date the application
Sign and date under penalties of perjury; the spouse also signs on a joint Maryland return, or a responsible corporate officer signs for an entity. A preparer enters a PTIN and signature. Add a daytime telephone number and, if you wish, check the email contact box.
Review and download the PDF
Check every line against your attachments, then download or print the completed PDF from FillingPDF and assemble the package described under How to submit.
How to submit MW506AE
You can send Form MW506AE by mail or by email. Use only one method.
- Mail: Comptroller of Maryland, Revenue Administration Division, Attn: NRS Exemption Requests, P.O. Box 2031, Annapolis, MD 21404-2031. Include the completed form and all attachments.
- Email: send the completed form and all attachments to [email protected]. Emailing does not speed up processing; if the attachments are large, send several smaller emails.
The form has a block for the settlement agent's name and mailing address, where the certificate is mailed if issued. The certificate is not emailed to you, even if you authorize contact by email. For questions, visit www.marylandtaxes.gov, email [email protected] or call 1-800-MDTAXES (1-800-638-2937), or 410-260-7980 in Central Maryland. FillingPDF lets you fill out and download the PDF; submission follows the channels above.
Common mistakes to avoid
- Submitting the application less than 21 days before the closing date; the form and instructions require receipt no later than 21 days before closing.
- Leaving the date of closing blank. The Comptroller does not process an application with no closing date.
- Checking the rental/commercial box without having filed the nonresident income tax returns reporting the rental income or loss; the application will be denied.
- Including settlement costs or other adjustments in line 1, which is the purchase price only (or date-of-death value for inherited property).
- Claiming capital improvements on line 2 without paid invoices or receipts and cancelled checks; they are not credited unless properly documented.
- Filing one form for several sellers, unless they are spouses filing a joint Maryland income tax return.
- Sending the application by both mail and email; the instructions say to use only one method.
- Omitting the settlement agent's mailing address, which can delay recording of the sale.
- Checking a Special Situations box without the extra documentation listed in the instructions or the addendum.
Frequently asked questions
What is Form MW506AE used for?
MW506AE is the Comptroller of Maryland application for a Certificate of Full or Partial Exemption from withholding on the proceeds of a Maryland real property sale by a nonresident individual or entity. The Comptroller's decision and the amount of tax are final and not subject to appeal.
How early must the MW506AE be received before closing?
The completed form and all required documents must be received by the Comptroller no later than 21 days before the closing date. An application with no closing date will not be processed, so enter the date of closing on page 1.
Where do I send the MW506AE form?
Mail it to Comptroller of Maryland, Revenue Administration Division, Attn: NRS Exemption Requests, P.O. Box 2031, Annapolis, MD 21404-2031, or email it to [email protected]. Use only one method; email does not speed up processing.
Do both spouses need to file separate MW506AE forms?
Each transferor/seller needs a separate form, unless the sellers are spouses filing a joint Maryland income tax return. On a joint return, both spouses sign the form; otherwise an individual or a responsible corporate officer signs.
What documents do I attach to the MW506AE?
Attach support for each line you complete, such as a settlement statement, contract pages, invoices with cancelled checks for improvements, and a depreciation schedule for rental property. A Special Situation adds its own documents listed in the instructions and addendum.
What if the property was a rental?
Check Yes to the rental/commercial question and give the dates used. Maryland law requires nonresident owners to file a nonresident income tax return reporting rental income or loss; if you did not file those returns, your application will be denied.
Can I fill out the MW506AE online?
You can fill out the MW506AE PDF online on FillingPDF and download or print it. FillingPDF is an independent service and does not submit it to the Comptroller; you mail or email it yourself.
Who receives the certificate if it is issued?
The Comptroller mails it to the settlement agent or title company whose name and address you enter on page 2. If you do not know the agent yet, email the details to [email protected]. The certificate is not emailed to you.
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